UK manufacturing showed further signs of recovery in November as output rose for a second successive month and new business levels steadied after more than a year of decline, according to the latest S&P Global UK Manufacturing PMI.
The headline PMI climbed to a 14-month high of 50.2, up from 49.7 in October and crossing the crucial 50.0 growth threshold for the first time since September 2024. The survey was conducted between 12 and 25 November, closing ahead of the Chancellor’s Autumn Budget.
Two components—output and suppliers’ delivery times—signalled improving conditions, although employment and purchasing inventories continued to shrink and new orders were broadly unchanged. Output growth remained modest and heavily reliant on investment goods, with consumer and intermediate goods producers seeing renewed contractions. Larger manufacturers also outperformed SMEs, the data showed.
New business volumes stabilised following a 13-month downturn, helped by firmer domestic demand. The fall in export orders eased to a 12-month low but foreign demand continued to decline, extending a 46-month run of contraction, with weaker sales reported to clients in the US, EU, China and Brazil.
Business sentiment strengthened to a nine-month high, with 56% of firms expecting higher output over the year ahead. Hopes of market stabilisation, new product launches and increased use of technologies such as AI and data-centre investments were among the drivers of improved confidence, though concerns persisted around government policy direction, trade uncertainty and high costs.
Employment fell for the 13th consecutive month, reflecting cost-cutting measures, recruitment freezes and the higher cost of hiring following increases to the National Minimum Wage and employer National Insurance contributions. Backlogs of work fell at the fastest rate since April, pointing to continued excess capacity.
Supply chains came under renewed strain, with vendor performance deteriorating by the greatest margin in almost a year due to capacity shortages, transport disruption and port delays.
Amid weak market conditions and competitive pressures, factory gate prices fell for the first time in more than two years, while input cost inflation slowed for a third straight month to its weakest level since October 2024.
Across the Channel, the eurozone’s manufacturing sector moved in the opposite direction. The HCOB Eurozone Manufacturing PMI dipped back into contraction at 49.6 in November, signalling a renewed—though marginal—deterioration in factory conditions. While output growth persisted for a ninth straight month, it slowed notably, weighed down by fresh declines in new orders and sharper job losses. National trends diverged significantly, with Ireland, Italy, Austria and several southern economies expanding, while Germany and France slid deeper into contraction. Supply-chain pressures also intensified, input costs rose at the fastest pace since March, and firms cut inventories at the steepest rate in more than four years.
Rob Dobson, Director at S&P Global Market Intelligence, said the return of the PMI to growth territory and a stabilisation in new business offered “further signs of recovery,” despite the “elevated uncertainty” that preceded the Budget. But he warned that overall growth remained “worryingly weak”, adding that softer price pressures and subdued industrial performance could shift the policy debate from inflation toward stimulating economic activity.
Industry reactions
Dave Atkinson, UK Head of Manufacturing at Lloyds, said: “Today’s figures signal a return to growth and a welcome year-end boost for manufacturers.
“As we approach 2026, manufacturers are focused on driving productivity and competitiveness while investing for growth. In shaping their plans, firms will be considering how initiatives such as the Industrial Strategy, investment incentives, and skills funding can support their ambitions.”
Boudewijn Driedonks, Partner at McKinsey & Company, commented: “UK manufacturing saw some healthy respite in November. Output showed a green shoot of growth. With orders stabilising, this month’s results were just enough to break the ice moving the index from contraction to expansion. Domestic demand made most of the impact.
“What’s encouraging is that while businesses see lower intakes from the US, EU and China, those that aim to diversify their exports say they are capturing opportunities such as in APAC and the Middle East. Altogether, it boosts confidence as we head into 2026 with growth propelled by investments goods production and 56% of businesses believing they will succeed in delivering growth next year.
“The thorn in manufacturers’ side is the selling prices being under pressure, compressing margins. Manufacturers need to get a tight grip on both margin management and productivity.
“But business sentiment is improving as manufacturers acknowledge new technologies can stimulate growth and increase competitiveness. AI can help manufacturers capture granular domestic growth opportunities and shifts in export momentum that the data point to, steering on volumes and pricing. And, when this is supplemented by AI productivity gains, there’s a real opportunity to pull ahead of the competition.”
Cara Haffey, Leader of Industry for Industrials and Services at PwC UK, said: “The latest PMI data indicates encouraging signs for the UK’s manufacturing sector as it edges above the neutral mark (50.0), reaching a 14-month high of 50.2 in November. This movement into expansion territory is a promising development, suggesting an improvement in domestic demand.
“Overall growth remains modest and sector-specific challenges are still evident: investment goods production saw a strong rise in production volumes, but consumer and intermediate goods saw contractions. The data also shows that large firms saw production volumes increase, however this wasn’t the case for SMEs who continued to experience a downturn. It is positive to see business optimism rise to a nine-month high, with over half (56%) of manufacturers expecting their level of output to increase over the next year.
“The Chancellor’s announcements last week came at a critical time for UK manufacturing, the Government’s continued focus on the UK’s industrial and sectoral strengths across our global, national, and regional manufacturing base and supply chain is important. Further investment in advanced manufacturing in UK regions is a positive step towards supporting economic and inclusive regional growth. Overall, November’s PMI provides a narrative of cautious optimism for UK manufacturing, as business digest the Budget announcements, the tide could turn either way.”
Mike Thornton, Head of Industrials at RSM UK, said: “A three-month consecutive uptick in manufacturing activity tipped the PMI index above 50 highlighting expansion for the first time since September last year. Jaguar Land Rover’s phased restart continued to support activity and new orders also jumped to 50 in November showing that not even budget speculation could derail production. In addition, stocks of finished goods dropped from 51.1 to 47.7 in November indicating strong sales, and with an improving pipeline of new orders, production looks set to increase into 2026.
“Following widespread speculation of imminent tax increases, manufacturers will be breathing a sigh of relief following the recent budget which reconfirmed commitment to two key policies in the UK Industrial Strategy and the Corporate Tax Roadmap – delivering much-needed certainty and stability to help industry invest and thrive.”
He added: “Extra funding in the budget for the Youth Guarantee and Growth and Skills Levy, and visa system reform, will be welcome news for industry to tackle the growing skills gap and shape its future workforce. However, reduction in crippling energy costs will have to wait until 2027 and future investment for advanced manufacturing is a longer-term pledge, restricting manufacturer’s ability to counteract global pressure now, and ultimately putting the brakes on the speed in which manufacturers could grow.”
Thomas Pugh, chief economist at RSM UK, said: The increase in the PMI in November suggests that the gradual ramp up of production at JLR more than offset any concerns ahead of the budget. Now that we know there won’t actually be any significant increase in taxes next year, we may get a boost in confidence in the December figures. Indeed, the future output index was revised marginally higher.
“That does also mean we are unlikely to get many more interest rate cuts next year. But the sharp drop in the output prices index from 53.0 to 48.8 will be another vote in favour of a December rate cut, which we feel is now nailed on.”
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